A Negotiable Order of Withdrawal account, better known as a NOW account, is an interest earning checking account that let customers write drafts against deposited funds. It largely disappeared after 2011, when banking reform made ordinary interest bearing checking accounts widely available.
What Made NOW Accounts Different
For much of the twentieth century, federal rules under Regulation Q barred banks from paying interest on demand deposit accounts, the technical term for standard checking accounts that allow withdrawals at any time with no advance notice. NOW accounts got around that restriction by technically requiring a waiting period, often seven days, before funds could be withdrawn. In practice, most banks never enforced that wait. The workaround was enough to let institutions legally pay interest on what functioned as everyday checking money.
Customers who wanted some return on cash they needed to keep liquid gravitated toward these accounts at commercial banks, mutual savings banks, and savings and loan associations. Alongside high yield savings accounts, money market accounts, and certificates of deposit, NOW accounts gave savers another option for balancing access to their money against earning something on it.
How the Ban on Interest Took Hold
The restriction traces back to the Great Depression. Bank failures were rampant in the 1930s, and regulators at the time blamed part of the instability on banks competing too aggressively for deposits by paying high interest, particularly large banks in New York. Regulation Q emerged from that fear, cutting off interest payments on demand deposits entirely.
By the 1950s, as interest rates climbed, banks looked for ways around the rule without breaking it outright. Some offered perks instead of cash: more branch locations, added convenience, even consumer goods as sign up incentives. Others got creative with pricing, offering favorable loan rates to customers who kept large deposit balances, or charging less than cost for services like check clearing. None of it was interest in name, but it amounted to the same thing in effect.
Haselton's Workaround and Its Spread
Ronald Haselton, who ran the Worcester, Massachusetts based Consumer Savings Bank, is credited with formally creating the NOW account structure, a direct challenge to the interest ban. Congress responded by legalizing NOW accounts in Massachusetts and New Hampshire in 1974. Two years later, the option spread across all of New England, capped at a 5 percent interest rate and still carrying that seven day notice requirement.
The account kept expanding. Nationwide availability arrived in 1980. In 1986, regulators lifted the 5 percent ceiling altogether, which gave rise to a new version called the Super NOW account, offering higher rates than the original product. For a while, NOW and Super NOW accounts represented the best legal route to earning interest on money customers might need on short notice.
Why the Dodd Frank Act Changed Everything
The turning point came after the 2008 financial crisis. Congress passed the Dodd Frank Act in 2010, and one of its many provisions repealed Regulation Q outright in 2011. That repeal erased the original reason NOW accounts existed. Once banks could pay interest on any demand deposit account without a workaround, the specialized structure of a NOW account no longer offered any advantage over a regular checking account.
Banks responded by folding interest paying features directly into ordinary checking products rather than maintaining a separate NOW account category. Competition among banks for these interest bearing checking accounts has stayed fairly muted, though. Most mainstream checking accounts still pay little or nothing, and the accounts that do offer meaningful rates typically demand something in return, such as minimum balances, regular direct deposits, or a set number of debit card transactions each month.
Comparing Deposit Account Types
| Account Type | Interest Paid | Withdrawal Access | Typical Requirements |
|---|---|---|---|
| Traditional demand deposit (checking) | Little to none historically; now varies by bank | Immediate, no notice needed | None or low minimum balance |
| NOW account (largely discontinued) | Yes, capped at 5% before 1986 | Technically required notice, rarely enforced | Minimum balance in most cases |
| Super NOW account (largely discontinued) | Higher than standard NOW rates | Similar to NOW accounts | Higher minimum balance |
| Interest checking account (modern) | Varies, often tied to conditions | Immediate, no notice needed | Direct deposits, debit card usage, or balance minimums |
Are NOW Accounts Technically Banned Today
No bank is prohibited from offering a NOW account by name. What changed is the incentive. Since Regulation Q disappeared in 2011, banks have full latitude to pay interest on any checking account they choose, so there is little reason to maintain the older NOW structure with its notice requirement and rate history. Most institutions simply built interest paying features into their regular checking lineups instead.
What This Means for Savers Comparing Accounts Now
Anyone hunting for a place to park liquid cash today faces a wider menu than NOW account customers ever had, from high yield savings accounts to money market accounts to interest checking products with cash back perks. The open question is less about what NOW accounts were and more about whether today's interest checking offerings, often loaded with balance minimums and activity requirements, actually beat the simplicity that made those older accounts appealing in the first place.
